Reflections of 2009: Sitnasuak:

Jim Nunes made over $15 million  through an agreement that gave him 40% pre-tax profit.   After we took control of the board majority of Sitnasuak, the subsidiary boards were still in place. The SNCT board hired Robbie to be that subsidiaries CEO, a position that never was created or filled before. It was not authorized by the parent company board.

I researched what little documentation was at the Nome headquarters. I didn’t have the luxury of a resource to call upon to gather insight on the full extent of business transactions that benefitted Jim.

Robbie signed an agreement giving Jim 2% revenue that the former Chairman, Homer acknowledged.  Thereafter, Robbie signed another agreement with Jim for an additional 2% revenue.  This one, Homer stated he did not know about.  Again, Jim made over $15 million based on 40% pre-tax profit of the manufacturing family of companies already.  4% company-wide revenue included everything throughout the family of companies, potentially including annual 7j funds and there was no end date in that agreement.

There were a few significant issues I found in the documents on hand at the Nome headquarters. But I didn’t have much first-hand experience with him. So what I did know was how to get to know him quickly.

I began making moves the months before the official decision was made to remove him. I had meetings with the district office to gain insight.

I wrote a resolution for the board’s consideration, which passed. The resolution authorized me (as the President/CEO) to integrate each of our subsidiary companies financial software into one system. This would give us access to our entire family of companies financial position in real time.

SNCT was the only subsidiary we didn’t have any access into the financial software program. Jim provided financial reports through his CFO to the subsidiary board members.

I sent an email to Jim, his CFO and other key stakeholders working in all the subsidiaries, informing them of the change we would be working on collectively to streamline our financial software. Then I let that email marinate to see what kind of response I would get.

Jim called my cell phone fairly quickly, which I ignored. I finally answered his call a day or so later in the evening. (Which made the time he was calling quite late in Washington DC time).

I was disappointed but not surprised with his agressive opposition to the financial software integration. I didn’t answer several of his calls, admittedly, to analyze him – but also because I was holding onto a sliver of hope that he would be forthcoming with our right to access our financial information first-hand.

I knew that once I answered that call, that sliver of hope could likely be gone.

This was a defining moment. 

This was the first of many defining moments our group came upon through this journey.

Leadership lesson in decision-making:

For the most part, you get to make decisions based on the amount of information that is available to you at that time.

Other times, you have to make decisions based the amount of information that is NOT available.

The quickest way to analyze the situation, in my mind, was to challenge his control over financial information. 

In September, our group met at a conference room in Anchorage to develop a plan that could be quickly implemented.

A sense of urgency is necessary in group process decision-making. We had that, courtesy of the local SBA District office, that delivered a letter to me with a short deadline requiring Jim’s’ removal or (ad-libbing) our companies being at risk of losing SBA 8 (a) status for federal contracting.

The goal was simple. We were taking control of our subsidiary company and firing the “manager/executive/consultant” who was running it.

Again, there wasn’t any corporate documents at the Alaska office to definitively know what our corporation actually controlled.  The most urgent issue was that we didn’t even know if the Washington DC office lease was in our corporation’s name or not. 

Our strategy of taking physical control of our business assets was at stake because of something as remedial as not having any documentation of the office lease.

Additionally, we didn’t know what banks our subsidiaries used or who had signatory authority for those bank accounts. 

This is a real life lesson that leaders must be confident to make decisions with the information they have available and to make sure they have the correct documentation in their toolbox to take back control over those areas of the business they didn’t have all the information about.

Making significant decisions can crippling for boards when they take over a majority.

They sometimes would rather not make a decision and watch the business die from attrition, instead of defending a decision they make that can either be successful or not.

It’s easier to rally the masses to gain control than to be the ones in control and realize your the newest target.

We had corporate resolutions drafted and convened a meeting to pass motions approving those resolutions.

Lesson in leadership: attorneys are advisors. They do not set your business strategy. They do not have the day-to-day information, relationships, or understanding as you do of your business. Attorneys have experiences that offer great insight and obviously legalities of situations.

Outside of legal issues, their insight is advice, plain and simple.

We traveled as a group to Washington DC, except for one board member, who flew to Puerto Rico. He was to enter the main factory at the same time we were entering our DC office.

We wanted to make sure we had control of communication with the leadership in our factories to fend off any potential misunderstanding.

Another of our board members was fluent in Spanish. She was with the rest of our group in DC.

We showed up at the office in Georgetown first thing Monday morning. We knew the awkwardness would be great and immediate. Beyond that we had no idea what we would find.

There were several people working in the office, as well as the guy, Jim. He looked disheveled, which I noted to myself right away.

We told him we needed to speak with him in the board room.

He said we were awfully young.

He said we didn’t know the intricacies and how delicate this line of work was. He gave a history of the risk it took to create this business. He cited a New York Tribe he worked for and that they unraveled into nothing after he was dismissed.

He said that would be what happens to us.

I responded after he finished and said,

“That’s neither here nor there anymore. I need you to focus on the next 15 minutes and how you are going to dismiss your employees and yourself so we can take control of our office.”

We changed the locks that day, changed the internet provider, and started going to the local banks armed with our resolutions to change signatory authority into our companies leadership.

What we thought would be a short-lived inconvenience, turned out to be a much longer-term multi-faceted fight that I didn’t know we were walking into.

In retrospect, Jim was right, we were young. But youth brings it’s own armor of idealism, energy, and naivete.